During the pandemic, we have seen an increase in holiday lets. With the restrictions to go abroad, a lot of people have been having a ‘Staycation’ exploring the wonderful options we have in the UK. 

If you have just started out renting homes or holiday lets, there are a lot of rules for these. HMRC are very strict when it comes to rentals. Replacing items need to be based on a like for like, is the property being improved, all these things need to be taken into consideration 

With self-assessments, we are seeing a lot of husband and wife ownership of property currently that don’t realise that both parties need to complete a self-assessment. If rent is being received or if a property has been sold it all has to be declared regardless of your other income.  

If both parties are named on the land registry, you both need to complete a self-assessment return. Unless you have seen a solicitor to change your set up with land registry, any property with joint names is classed as 50:50 ownership. Even if one person has the most interest in the property, all named people on the land registry will have to send a return to HMRC.

It is important you read up the rules on taking income from property, whether it is long term rental or holiday let ownership. The number of people we see not declaring income and then having the shock of HMRC writing to them asking for back dated returns is increasing.

HMRC do have the full facility to check land registry registers and transfers of land ownership. Backdating these returns can be costly for the owner and cause a lot of unnecessary stress.

We are here if you need to query anything regarding your property ownership.

Happy New Year to you all, we hope you’ve had a lovely Christmas. It’s the New Year but some things remain the same, and that’s the deadline of 31^st January for Self-Assessment returns.

Self-Assessment is a system HMRC uses to collect tax. For people who are self-employed, with their own business or others who make additional income. 

The dates for Self-Assessment is 

1^st April 2016 to the 31^st March 2017. With online returns needed to be submitted by

31^st January 2018 and paper returns to have already been submitted by 31^st October 2017.

The best way to keep the tax bill down is to have your paperwork organised. You will need the actual receipts to claim as expenses. Collate your receipts and keep together as HMRC can ask to see evidence at any time. Another great way is to utilise the ISA savings as any interest received is tax-free. You’ll keep your savings on a tax-free basis for as long as you keep the money in your ISA accounts.

Higher rate tax payers benefit from additional tax savings when they contribute in to pension schemes and give to charity.

An example of a list of records you will need are;

•          Business and personal bank statements
•          Records of income
•          Records of purchases
•          P60/P45
•          Rental Income
•          Interest Income
•          Child Benefit and Income Support

You need many other records to keep, here at Cross Accounting we give our clients a more in detail list of records which we require from them to complete their tax return. This also includes a reminder of approaching deadlines to ensure not to be penalised. HMRC fine £100 for anyone who misses the 31^st January deadline.

HMRC have revealed a record number of people are filing for self-assessment this year as the numbers are north of eleven million. If you’re a couple of years behind, then do not worry as you’re not alone, we have taken on a number of clients in this situation, and have supported them and brought them up to date. If you’re not sure if you need to submit a self-assessment or you need to complete a return, you can call us on 02920 653 995 or visit our website on www.crossaccountingservice.co.uk to see how we can assist you. 

Love is in the air this month, with Valentine’s Day just here .. and now is the time to give your business the TLC it also needs.

Investment. Investment in a business can be many things. It can be your investment of time and energy in nurturing your business as it grows. It can be working on your operations, improving your processes and making yourself more efficient.

Investment is money. The business may not be generating you the income you were expecting, so investing some money into the business to spend on a marketing campaign, or buying that piece of equipment that will make the operation run smoother may seem painful initially. We are still at the start of the New Year, getting these investment ideas up and running will be worth it in the end.

Now is the time to take a closer look at your customer base, are you meeting their every expectation? Is there something you are not currently offering that could add value, or which you can use to up-sell to increase your sales turnover? A business which knows their customers very well, and manages their expectations always succeeds.

Marketing. Take a look at your marketing strategy. If you are putting time and money into activities that don’t work, then you need to stop them! Only spend money and time on what works for your business. Measuring the success of your marketing is a very important exercise that needs to be done on a regular basis.

Processes. Is there something you are doing that can be done more efficiently? The difference between profit and loss can often be a case of the process being too cumbersome. So, streamline your processes to meet the changing needs of your business. This will become increasingly vital as your business grows. If you don’t manage your processes – you are guaranteed to waste money.

You the owner. Make sure you are taking care of yourself. If you are busy and stressed you will not have the mindset to focus on your business effectively. Watch your stress points and take regular holidays. I still see far too many clients visiting me looking completely worn out. It’s not good for you – and it’s definitely not good for your business.

Your business is an investment for the future, feed it and it will grow.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Your year end can cost you more than you think

Preparing your year end accounts can be costly your business – and that’s before you’ve event considered the financial aspect.

In finding, organising and making sense of your paperwork and records, there are time costs, emotional costs (usually stress!) and work-life balance costs to consider.

15% off your year end with us

Cross Accounting Services can help on all fronts. We love year end and so as a thank you from us, we’re offering 15% off your first year end fees with us.

So, you get to spend time doing the things you love at a reduced all round cost – and we get to spend time doing the things we love, thanks to you!

Call Nicola on 029 2065 3995 and quote reference CA15 to receive your discount or email her asking for more information also quoting CA15 Closing date 31 March 2014

Don’t be one of the £2 million people who leave the updating of their Self Assessment to the last minute, or worse miss the deadline altogether. Bite the bullet if you need help then pick up the phone to an experienced professional.

Many clients that come through our doors, still needing reminding of what information is required to complete their Self Assessment online without a hitch.

Please see my 6 point plan

Your UTR Number and National Insurance
To be able to submit a Self Assessment you first have to be registered with the Inland Revenue as Self Employed. They will then issue you with a 10 digit reference number call a UTR number. This can be done over the telephone 0845 900 0444

Or online, follow the link below.

https://online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dept

This takes about five to six weeks for the Inland Revenue to register you, you will then have to telephone them to get your 10 digit UTR number. This is not automatically sent to you.

The Government Gateway
To register for Self Assessment online which allows you to send your Self Assessment online, you are issued with a 12 digit reference number which is printed out, and a password gets sent to your nominated address. If you are using an Accountant they will give you an 64-8 form to sign so that they can act as your agent with the Inland Revenue. They will then be able to send off your Self Assessment online through their agency number.

Partnerships
There is mis-conception that Partnership accounts are as straight forward to submit as your normal Self Assessment. You can only send out a paper version if you do this yourself by the deadline 31 October. Or you can submit the form online provided you have professional software, your Accountant professional can assist you with this.

Do not leave these to the last minute or you may find a £100 fine per partner you weren’t expecting if you miss the deadline. This needs to be completed along with your normal Self Assessment as an individual.

Paperwork Required
Self Assessment covers ALL income you receive during the financial year, 6 April to
5 April for in the UK and the rest of the world. This is determined by your residency status, all UK residents are to disclose their whole income.

All records of purchases during the financial year including any equipment or capital expenditure.
VAT return’s if that’s applicable
Your full 12 months bank statements, personal and business including saving accounts.
If you have had other employment all P60’s or P45’s
Dividend and interest payments.
Benefit payments
Property income and foreign income
Selling of personal assets and stocks and shares

All other records of income not covered above.

What you get in return
We will provide you with a full record of your income for the year for your business, along with a tax computation recording all of your other income. This takes into account the relevant tax reliefs available. Ie

Your tax code, – your tax free allowance
Capital gains tax free allowance
Pension payments
Charity payments
EIS and venture capital schemes – Investments
Capital Allowances
Rent a room relief – Property income
Wear and Tear Allowance – Property income

Deducting any tax that you have already paid.

You may be liable for tax on your trade income, and national insurance.

This is not complicated if you give yourself plenty of time to get everything together. We take you through every step of the way.

Payment
You have to make payments on account if your turnover is over £70,000, these are taken at the 31 January deadline and 31 July. We will notify you of these deadlines as they approach.

Monthly you can set up a direct debit with the Inland Revenue

Bill Pay or cheque, any balances then can be settled through the online system Bill Pay, credit card charges apply or by cheque in the post, or through the Giro system at the Post Office.

Self Assessment can be submitted anytime after the 6th April, so if theres a refund due to you why wait until January to get the paperwork to your Accountant. You can do it anytime.

These records need to be kept for six years even if you returned to the PAYE system.

Give us a call today, and make it a stress free process. 02920653995 or email Nicola@crossaccountingservice.co.uk

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

As the spring of 2024 unfolds, the Government have unveiled their budget, setting the stage for economic policies, social initiatives, and infrastructure development for the upcoming fiscal year. This pivotal moment not only reflects current priorities but also shapes the nation in the months and years to come. In this blog, we delve into some of the top topics emerging from the spring 2024 budget and their potential implications.

National Insurance

The main topic for the budget was the cut in national insurance again. The chancellor reduced the amount of national insurance employees would pay by 2%. The rate going from 10% to 8% in April 2024. It is estimated that the cut would be worth about £450 a year for someone on a £35,000 full-time salary.

It is estimated that around 29 million workers are set to benefit from the change. The rate of 'class 4' national insurance contributions, which is the main rate paid on self-employed profits of between £12,570 and £50,270, will be cut from 9% to 6% from 6 April. This rate had been due to fall to 8% from 6 April, but the chancellor has taken it one step further today. The self-employed will benefit too as the rate is slashed from 9% to 6%.

Housing

The chancellor confirms plans to scrap the furnished holiday lets regime. The initiative gives tax reliefs on properties being rented out to holidaymakers and make renting out to holidaymakers more profitable than to long-term tenants. The move is expected to raise £300m a year for the Treasury, however a blow to furnished holiday lets owners.

The chancellor also announced the government will reduce the higher rate of property capital gains tax. This is a tax paid on the amount of gain when selling a property. Currently the rate is 28% for higher rate earners, but this is being reduced to 24%

Business and Investment

The VAT registration threshold will be increased from £85,000 to £90,000 from the start of April. This change is estimated to help tens of thousands of businesses.

Benefits and Income Support

The Household Support Fund, which helps people struggling with cost-of-living pressures and was due to close in four weeks' time, will continue for another six months.

Full child benefits to be paid to households where highest-earning parent earns up to £60,000 - the current limit is £50,000. The top of a taper to withdraw the benefit will be raised to £80,000 from £60,000 at the moment.

The chancellor also announces a consultation on child benefit rules, to apply it to collective household incomes rather than for individuals from April 2026.

If there is something you want to know more about, you can call us on 02920 653995 or

01656 530063 to discuss.

The chancellor, Rishi Sunak announced the Autumn Budget on Wednesday. A ‘New economy’ as it was branded to help us get through the winter. We digest the budget and give the main highlights and what it means for you. If you did want to read the full budget, please click here 

National Living Wage

There is a lot to get through and one of the notable changes in the Chancellors budget was the increase in the National Living Wage. We will see an increase in pay to £9.50 per hour for anyone aged 23+ from April 2022. That’s an increase of 6% from the current £8.91 and the pay rise worth extra £1,000 for full time workers.

Social Care Levy

A new health and social care levy is to be introduced on all of us. It is a 1.25% charge on 

National Insurance from April 2022.  The rate also affects Employers National Insurance, and the dividend rates will also change in line with the new social care levy of 1.25%

• Employees National insurance will change from 12% to 13.25%

• Employers National Insurance will change from 13.8% to 15.05%

• Sole traders National Insurance will rise from 9% to 10.25%

Dividend rates as follows:

• Lowest rate 8.75% from April 2022

• Mid-rate 33.75%

• High rate 39.35%

From April 2023 the 1.25% social care levy will show as a separate section of the tax rate system. National Insurance will revert to where it was.

Why is this social care levy coming in?

The funds from the social care levy will be used for care homes and funding for pensioners. This includes several reforms to how people pay for adult social care in England, supported by £5.4 billion of investment over the next three years.

The reforms include:

• From October 2023 a cap on personal care costs of £86,000.

• The threshold above which somebody is not eligible for local authority support towards their social care costs (upper capital limit) is increasing from £23,250 to £100,000 from October 2023.

• The threshold below which somebody does not have to contribute towards their care costs from their capital (lower capital limit) is increasing from £14,250 to £20,000.

• If somebody has capital between £20,000 and £100,000 the local authority may fund some of their care, but they may have to contribute up to 20% of their chargeable assets per year (in addition to their income).

• Increasing the amount of income that care recipients can retain after contributing towards their care costs (the Minimum Income Guarantee and the Personal Expenses Allowance) in line with inflation from April 2022.

Corporation Tax

From April 2023 changes to corporation tax are coming in place. The reintroduction of the marginal rate system which has been done away with for several years. 

Corporation tax rates for business with:

• Profit £50,000 or below – 19% rate

• Profit between £50,000 to £250,000 - 25% rate (less marginal relief calculation)

• Profit above £250,000 - 25% rate

Super deduction for purchase of equipment and allowance capital allowances will bring tax relief of 130% applies to incorporated (Limited companies, PLC’s) business only and is in place for two years. 1 April 2021 to 31 March 2023

The £1 million annual investment allowance is still available to every company including sole traders.

Business Rates

A new one year 50% business rates discount for retail, hospitality, & leisure businesses for England. Wales already have a discount in place until April next year. We will have to see what the Welsh government say in December for the updates of business rates in Wales. 

Small business rates relief still apply.

Universal Credit

Universal Credit taper rate is cut by 8%, as of now for every £1 earned, 63p gets taken off. With the new rate cut, for every £1 earned, 55p will be deducted. Allowing lower paid people to keep hold of more benefit when they are working. The target date for this is 1st December.

Alcohol Duty

The tax on some alcoholic drinks such as beer, cider and wine will be slashed. The drinks with lower-level percentage of alcohol will mean a lower rate of tax. This means that next time you go to the pub and order a pint or on a night out, a glass of prosecco, will be a little bit cheaper.

It doesn’t matter if it is UK produced or imported. Tax relief for small brewers that produce under 8% alcohol. 

The budget brings about optimism boosted by prediction of higher growth for the UK after Covid. The Chancellor hit an upbeat tone as he talks up building a “stronger economy of the future”. Again, if you want the full version of the budget, please click here

All the important rates and threshold for the tax year 2021/2022

National Minimum Wage

This takes effect from 01 April 2021 and all workers are entitled to.

Please note the age rate bracket has changed from previous years also.

PAYE Tax Rates and Threshold

These rates depend on the amount of income you earn.

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

Statutory Sick Pay (SSP)

The same weekly SSP rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

Dividend Allowance

You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.

Mileage Allowance

The allowed deductible rate per mile for business use.

It has been great to see the UK finally move in a positive direction out of lockdown. While we can look forward to restrictions loosening, we need to remember the financial new rules coming in April. It is always this time of year when the financial rules start to come in to place, the budget will be announced this week, and we will digest this for you to see what kind of economical shape we will be in, so keep your eyes for that one.

IR35 (Off Payroll Working)

The long overdue of IR35 also known as off payroll working, was initially announced to come in, in April 2020, however due to the pandemic, this has been pushed back to April 2021.

This will affect you if you are in the private sector from any industry and provide a service through an intermediary such as your own limited company, a partnership or an individual who is on self-assessment and the client could constitute an employer/employee relationship.

So, why are these rules coming in?

The rules are coming into level the playing field and to make sure that workers who would have been an employee if they were providing their service directly to the client, pay broadly the same tax and national insurance contributions as employees. You could claim travel expenses and other expenses before, which would lower your tax liability, now this will not be allowed.

If you are a worker and your client is in the private sector, it is your responsibility to decide your own employment status for each contract. Things that will help decide your employment status are;

·         Who has the control? Can you reject certain projects and decide your working days?

·         Do you use your own tools?

·         Do you have public liability insurance?

If you are a worker and your client is in the public sector like a school or library, it is their responsibility to decide your employment status. You should be told of their decision; we have seen a large number of the larger companies starting to make changes to their arrangements with their subcontractors in preparation for this.

Reverse Charge VAT

If you are in the construction industry, there are changes coming in from

1^st March 2021 to the way you apply VAT to your invoices. If you are VAT registered in the UK, and supply building and construction industry service, if the following applies for you, then you will have to use the reverse charge;

·         Your customer is registered for VAT in the UK

·         Payment for the supply is reported within the Construction Industry Scheme (CIS)

·         The services you supply are standard or reduced rated

·         You are not an employment business supplying either staff or workers, or both

·         Your customer has not given written confirmation that they do not make onward supplies of the building and construction services supplied to them, also known as an end user.

So, that might have been a bit of jargon and hard to follow, so let us break this down in simpler terms.

Example 1

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs (this can be a company as well), and Joe Bloggs is VAT and CIS registered and has not given Alpha Ltd written confirmation that he is an end user, then the reverse charge VAT must be used.

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £0

Gross - £1,000

(Reverse charge applies)

Example 2

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs, and Joe Bloggs is not VAT registered, then the reverse charge must not be used, and VAT must be charged as normal.

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £200

Gross - £1,200

The services you may provide that are subject to reverse charge are;

·         constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

·         installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

Please click here for the full list of services.

What you will need to do

If you are needing to use reverse charge VAT then you will need to verify some of your customers information. You will need to verify;

·         If your customer has a valid VAT number – (Click here to verify)

·         If your customer is reporting under CIS. (This can be verified using the construction industry scheme online service)

Sole trader:

o   Name

o   Unique taxpayer reference

o   National Insurance number

Company:

o   Name of Company

o   Company’s unique taxpayer reference

o   National Insurance number

·         Ask your customer to confirm whether they are an end user or intermediary supplier (you will need written confirmation)

These rules will be enforced by HMRC, so you will have to take care to do this correctly. If you are facing problems with your own subcontractors with IR35, or if you are not sure whether this reverse charge VAT applies to you, please get in touch with us. This can be complicated to get your head around. 

If you have sold an asset that has increased in value, then Capital Gains Tax will be due. It is the gains that you will pay tax on and not the amount of money received. When Capital Gains Tax is due, it is more than often, when a house has been sold. Although Capital Gains Tax will be due when you have sold a painting, stocks and shares, sale of a business etc…

So, for example, if you have bought a house for £120,000 and sold it for £190,000 then Capital Gains Tax will be due on £70,000. You do not pay any Capital Gains Tax if you have sold a house that is your main home and residence. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

Your tax-free allowance also known as the Annual Exempt Amount for Capital Gains for this current tax year (2020/2021) is £12,300.

You do not pay Capital Gains Tax on assets you give or sell to your husband, wife, or civil partner, unless,

• You separated and did not live together at all in that tax year
• You gave them goods for their business to sell on

If they decide to sell later, they may have to pay tax on any gain. Their gain will be calculated on the difference in value between when you first owned the asset and when they sold it. They should keep a record of what you paid for the asset. 

The rules have changed from April 2020.

 If you sell a house, you must report and pay any tax due within 30 days of selling. Before you had until your next self-assessment to report and pay. If you have not reported and paid any gains within 30 days of selling, HMRC can charge penalties and even interest on any late payments.

You will have to register and you’ll need a Government Gateway user ID and password to set your account up or sign in. If you do not have a user ID, you can create one the first time you sign in.

You will need the following information at the ready,

• Property address and postcode
• Date you got the property
• Date you exchanged contracts when you were selling or disposing of the property
• Date you stopped being the property’s owner (completion date)
• Value of the property when you got it
• Value of the property when you sold or disposed of it
• Costs of buying, selling or making improvements to the property

Once you have an account you can sign in at any time to report Capital Gains Tax on UK property or see any returns you have already sent.

Once you have sent your return to HMRC, you will be notified on how much you owe in Capital Gains Tax, how to pay and when to pay by.

How much do I pay?

Rates on Capital Gains varies. If you are a higher rate taxpayer you will pay,

• 28% on your gains from residential property
• 20% on your gains from other chargeable assets

If you are a basic rate taxpayer, the rate depends on the size of the gain and your taxable income.

1. Work out your taxable income
2. Work out your taxable gains
3. Deduct your annual exempt amount from your taxable gains
4. Add this to your taxable income
5. Work out which tax rate you pay

If the amount falls within the basic income tax band (£12,501 to £50,000 for 2020/2021) you will pay,

Example